What does the term "trade retaliation" imply?

The term "trade retaliation" refers to actions taken by a country in response to trade barriers or other restrictive measures imposed by another country. Specifically, implementing punitive tariff measures is a direct form of trade retaliation, where a country raises tariffs on imports from the offending nation. This is done as a way to pressure the other country to remove or reduce its own trade barriers. The idea is that by making imported goods more expensive, domestic producers can better compete against foreign imports, ultimately leading to a more favorable trade balance.

In contrast, establishing free trade agreements, encouraging foreign investments, and reducing trade barriers are generally aimed at promoting trade and economic cooperation between countries rather than retaliating against one another. Therefore, they do not align with the concept of trade retaliation, which fundamentally involves imposing some form of economic punishment in response to perceived unfair trading practices.